Two Degrees
Topic of the day

ERP

Enterprise resource planning: the system that ties your jobs, your money and your people into one set of numbers.

Show of hands
  • Who has one?
  • Who’s looking for one?
  • Who thinks they might need a better one?
28 November 1979 · Air New Zealand Flight 901
Two
Degrees

257 people left Auckland on a sightseeing flight to Antarctica and back.

The route

A flight they had never flown

Auckland to McMurdo Sound and back: about 2,800 miles each way and 11 hours in the air.

Both pilots were experienced. Neither had flown this route before.

40°S50°S60°S70°S New Zealand Southern Ocean Antarctica McMurdo Sound Auckland
The change

Two degrees

Someone changed the flight’s coordinates by two degrees. Nobody told the crew.

The autopilot now steered 28 miles (45 km) east of the briefed route. The actual track ran straight at Mount Erebus, an active volcano rising to 12,448 feet.

Victoria Land Ross Island Ross Ice Shelf From Auckland ↑ Briefed route Mt Erebus 12,448 ft 28 mi 2° Angle exaggerated · not to scale
Over the ice

Lower, for a better view

The crew descended below the cloud so passengers could see the landscape. They leveled off around 1,500 feet.

Altitude16,000 ft
What the crew saw: flat ice
Sector whiteout

White on white

Snow below, cloud above. With no shadows and no horizon, the slope ahead looked like flat ground.

From the cockpit, nothing looked wrong.

Mount Erebus 12,448 ft 1,500 ft
Ground proximity warning
Whoop whoop
Pull up
6seconds

The alarm sounded six seconds before impact. The crew called for full power and began to climb.

Flight 901 struck the lower slopes of Mount Erebus.

257
Passengers and crew · No survivors
A terrible tragedy brought on by a minor error. A matter of only a few degrees.

Source: Arthur Marcel, “Mount Erebus Plane Crash,” Ockham’s Razor, ABC Radio National, 2007.

Construction runs on instruments too

Small errors. Same ending.

  • 1°A cost posted to the wrong job.
  • 1°A change order that never got billed.
  • 1°Committed costs nobody can see.
  • 1°A WIP schedule built on last month’s numbers.

At a 5% net margin, two points of margin you can’t see is 40% of your profit.

JanMarMay JulSepNov Cash crunch What the reports say What the jobs are doing Illustration
Today’s flight plan

Five waypoints to a better ERP decision

  1. Why

    Visibility. You can’t steer what you can’t see.

  2. When

    The warning signs you’ve outgrown what you have.

  3. What

    The three legs that make an ERP work.

  4. Ready?

    Questions to answer before you shop.

  5. How

    Choosing an approach and a system.

WhyShow of hands

How do you steer?

Gut feel

The wet thumb to the wind. How many of you run your business this way?

Dashboard

A tightly dialed set of controls and levers. How many of you run it this way?

WhyThe core reason for an ERP

Visibility

It lets you see, so you can steer the ship.

One data point is a keyhole. A limited point of view leads to myopia, and myopia leads to poor decisions. You need as many data points as you can get.

Budget Cost to date Today Committed costs Forecast: over budget Keyhole view: looks fine Full view: the mountain was there all along
WhenYour pull-up alarms

Hear the alarm while you can still climb

How many of these sound familiar?

Two or more? You’re flying on gut feel, and it’s time to look at your instruments.

WhatWhat makes an ERP work

Three legs of the stool

DataSystemPeople
Data

Good data going in

  • Bills
  • POs
  • Daily logs
  • Budgets
  • SOVs
  • Invoices
  • Hours
  • Progress
  • RFIs
  • Submittals
  • Project communications
  • Change orders
  • Photos
  • Subcontracts
  • Compliance docs
  • Payroll
System

An architecture built to hold it

Spreadsheets and PDFs in SharePoint won’t cut it. They give you an incomplete picture, even with AI on top.

People

People who can read it

A qualified project controller and accounting team to aggregate and analyze it, not just a bookkeeper with tenure.

Take away any one leg and the stool falls.

Ready?Before you shop

Questions to answer first

People
  • Do we have the right team to support the implementation?
  • Do we have the right team to run it afterward?A powerful system in untrained hands is a liability.
  • Who is the executive sponsor, and who makes the final calls?
  • How will we train people and drive adoption?
Data
  • What data comes over, and what can we leave behind?
  • Is our master data clean?Vendors, customers, cost codes and open jobs.
Process
  • Are our processes defined well enough to work without an ERP?More work by hand, but it has to work. Automate a bad process and you just do bad 💩 faster.
Time and money
  • Have we given ourselves enough time?This doesn’t happen overnight.
  • Have we budgeted for all of it?Implementation, training, and backfill for the people pulled onto the project, not just licenses.
  • When do we cut over?Avoid busy season. A fiscal year or quarter start is cleanest.
  • What does success look like, and how will we measure it?
HowTwo approaches

Best of breed or full stack?

Best of breed, then integrate

Pick the best tool for each job, then connect them.

Pluses
  • The strongest tool for each function: estimating, project management, payroll, accounting
  • Field teams get software built for how they work
  • Replace one piece without replacing everything
  • Adopt and spend in phases
Minuses
  • Integrations to build, pay for and maintain, and they break
  • Data lives in several places, so there’s no single source of truth
  • Vendors, cost codes and jobs get set up twice and drift apart
  • Cross-system reporting means manual stitching or a data warehouse
  • Several vendors and contracts, and finger-pointing when something fails

Full stack

One platform runs accounting, projects, payroll and reporting.

Pluses
  • One database: job cost, billing and the GL agree without syncing
  • Real-time reporting across departments
  • One vendor, one login, one support line
  • Fewer integrations to break, simpler security and permissions
Minuses
  • Some modules are weaker than the best standalone tool
  • A bigger implementation, with more change at once
  • Harder to switch away later
  • Field users may find it less tailored to their work
  • Often a higher license cost from day one

Most contractors land in between: a full-stack core for financials and job cost, with a few specialist tools connected at the edges.

HowEvaluating a system

What to look for

Ease of useIf people won’t use it, it fails. User adoption is everything.
ConnectivityConnects to your other data sources: estimating, payroll, banks, field apps.
SecurityRole-based permissions, single sign-on, an audit trail, and you can get all of your data out.
ReliabilityUptime, backups, and a vendor that will still be here in ten years.
Cost: one-time and ongoingLicenses, implementation, integrations, training, support and upgrades.
Delivery partnerWho implements it, and have they done it for contractors like you?
A qualified internal teamPeople in-house who can own it and run it.
Built for constructionJob cost, WIP, progress and AIA billing, retainage, certified payroll.
Real-time reportingDashboards from live data, not month-end exports.
Field and mobile accessTime, logs and photos captured where the work happens.
Room to growMore entities, locations and volume on the same system.
ReferencesTalk to contractors your size who went live recently.
Bottom line

Check your coordinates before you take off

The errors that sink a construction business are small ones you can’t see. An ERP fixes that only when your data, your system and your people are all ready. Get ready before you shop.

This week

Score your three legs from 1 to 5: data, system, people. Start with the lowest score.

2° Where you think you are Where you actually are Today
BlueCollar Projects in NetSuite

What good looks like

  • WIP, liveOver and under billings for every job, as of any date. No waiting for the 20th.
  • Job cost by cost codeOriginal, current and projected estimates beside actual and committed costs.
  • Job health on one pageContract, earned revenue, gross profit and cash, with month-over-month change.
  • Milestones with ownersPhase gates show who owns each milestone and what the field is reporting.
  • One schedule for the companyEvery project and every crew on one timeline, with overloads in red.
  • Cash controlHold sub bills until the customer pays, then release them together.
BlueCollar WIP report in NetSuite: contract, estimate, earned revenue, gross profit and over/under billing for every job Project budget by cost code with original, current and projected estimates, actual costs and committed costs Project analytics: contract value, revenue earned, gross profit, completion, and month-over-month project metrics Phase gates: 14 project milestones with dates, status, owners and a field status note Company-wide project schedule and resource loading timeline, with over-allocated resources in red AP workbench pay-when-paid release groups: held bills, overdue groups and collection progress by project
Where we can help

Insightful, and a little overwhelming?

If all of this feels useful and overwhelming at the same time, you don’t have to work through it alone. Here’s where we can help.

Strengthens System

NetSuite evaluation and implementation

Find out whether NetSuite fits your business, then get it live and built for construction.

Strengthens System and Data

BuildOps implementation and support

Set up right the first time, and supported after go-live.

Strengthens People

Fractional controller support

A qualified controller on your team without a full-time hire.

Strengthens all three legs

Complete back-office financial outsourcing

We run your back-office finance for you, NetSuite included.

Questions?
bluecollar.cloud